WORKERS’ COMPENSATION EXCLUSIONS PRECLUDE UM/UIM COVERAGE
Last Wednesday, the United States District Court, Western District of Texas, San Antonio Division, granted summary judgment in favor of the insurer after finding that the insurer met it’s burden in proving the workers’ compensation exclusion applied to preclude UM/UIM benefits sought by the insureds, and the insured’s failed to provide evidence that it did not. In Sanchez v. Great American Insurance Company, 2020 WL 2086552 (W.D. Tex. April 29, 2020), Thomas Sanchez, Jr. and Daniel Crisp were injured in an auto accident while occupying a vehicle insured by their employer, Goodwill Industries through Great American Insurance Company. The policy included underinsured motorist (UM/UIM) coverage. Sanchez and Crisp requested and received permission from Great American to settle for the other driver’s $30,000 policy limit. Then claiming damages in the amount of $750,000 and $2,500,000 respectively, Sanchez and Crisp then presented their UM/UIM claims.
In defending the claims, Great American relied on the worker’s compensation exclusions precluding UM/UIM coverage such that it would “directly or indirectly benefit…[a]ny insurer or self-insurer under any workers compensation, disability or similar law” and limiting the insurance coverage in that it would only “pay all covered damages not paid or payable under any…workers compensation, disability benefits or similar law” and requested a sixty-day abatement of the case to allow plaintiffs to seek reimbursement from their workers compensation carrier and provide written proof that the conditions precedent to triggering UM/UIM coverage had been met. Four months later, and not receiving the requested proof, Great American moved for summary judgment arguing that it is not contractually obligated to pay UM/UIM benefits based on the workers’ compensation exclusions.
The court observed that Great American argued that it “has never denied coverage but is instead merely waiting on Plaintiffs to provide it with information concerning Texas Mutual’s coverage decisions or payments.” And, that Great American is not obligated to pay until it first receives proof “that there is no coverage available under the workers’ compensation policy, a condition precedent to its obligation to pay.”
The court reviewed the voluminous records filed by Plaintiff’s in response and, Great American’s argument that the “voluminous evidence”…”still does not show a final determination from Texas Mutual, instead showing that Texas Mutual maintains secured liens against both Plaintiffs, confirming that payment of UM/UIM benefits would go to Texas Mutual’s benefit, in contravention of the Policy’s exclusion of payments that would benefit workers’ compensation carriers.” Accordingly, having met their burden in proving the exclusion applies, and because Plaintiffs failed to meet their subsequent burden, summary judgment was granted to Great American.
Editor’s Note: MDJW congratulates Great American Insurance Company on this significant win. William McMichael and Austin Hagee of MDJW had the privilege of representing Great American in this case before the Federal District Court and appreciate the carrier’s willingness to let them try to win it by motion.